Poultry firms anticipate holidays to staff

Poultry firms anticipate holidays to staff
In the sector they warn that they are working at a loss due to the decrease in sales
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The poultry industry will begin to anticipate vacations to its employees from next month due to the situation of oversupply of production that had the sector, which did not find a balance between domestic consumption and export needs.

This was expressed by Roberto Domenech, president of the Center for Poultry Processing Companies (CEPA), which groups the chicken industry. Despite the moment he faces the activity, the manager is confident that there will be a recovery of consumption in the coming months.

By oversupply, companies are now marketing the kilo of chicken below the price that, they argue, would allow to cover their cost equation.

“The industry should sell the kilo of chicken at 24 pesos plus VAT ex-factory, and today we are at 19.50 or 20 pesos plus VAT at the best,” he explained.

The leader acknowledged that there are industries that have disarmed production lines to reduce supply. In fact, against a production of 2.12 million tons achieved in 2016 for this year the sector would close with a volume of 2.02 million tons. “We’re going to be at about 100,000 tonnes less,” Domenech said.

While some companies cut production, others are doing so now, and within that framework inscribes the plan to anticipate vacations to staff. “The sector is very complicated and there are companies with difficulties, we have anticipated holidays and in the next 60 days there will be more movements of this type.” What should start in November-December will happen in the next 15 or 20 Days, “he said.

According to Domenech explained, the reduction in production that was applied in the activity is, among other objectives, “to avoid a price war”. In this line, he said: “Some companies did the reduction of production and are finding a balance. We are trying to avoid the price war and preserve us ahead, because this is going to change.”

The latest improvement in the exchange rate could make exports more competitive. According to data from the National Service of Agrifood Health and Quality (Senasa), in the first half of 2017 chicken exports (fresh meat and by-products) stood at 106,433 tonnes, down 2% from the same period last year.

The manager said that there was a “bad price in the domestic market,” and the same happened with the export for the back dollar. Faced with this scenario, he said that “it was decided to lose money with the export.”

“What was exported failed to improve the domestic market and balance. The oversupply is very large,” he said. On the new value of the dollar, he said: “We hope that with the variable of the exchange rate we can recover.”

The year would close with an export volume of 220,000 to 225,000 tons. It is worth remembering that in 2016 214,797 tonnes had been placed, a volume 12% lower than the previous year.

For the reduction of production, will also fall the supply for domestic consumption. Last year, consumption stood at 45.8 kilos per inhabitant per year. Meanwhile, this year would close with 42 kilos per inhabitant per year. “We can not ask people to consume more chicken. Consumption is on a roof,” Domenech said. In this context, the industry insists that it is trying to avoid the “price war” in order to avoid further damage to business activity.

In the last Rural Exhibition of Palermo, Domenech projected that by 2027 the plan of the industry is to export 500,000 tons worth $ 1250 million dollars.